Realty World & Vista Home Loans Weekly Update Meeting February 14, 2007 &

Happy Valentine’s Day Congratulations to Donna!! (…winner of a handy 1 st Aid Kit) &

This meeting is available via telephone conference. & This Slideshow is on the net! (Start sharing your slideshows for free at www.slideshare.net!) &

Watch for Fraud! Our office is not perpetrating the latest fraud, but don’t get caught by it! CREDIT FOR REPAIRS… Watch out for it; the Government sure is! &

Tomorrow is the BIG DAY! We’re sponsoring NAHREP of CCC’s monthly luncheon. Plan on being here at 10:00am with your Realty World clothes, name tags, business cards, for sale flyers, pens, magnets, and anything else you want to give away! Please treat this like the marketing/networking opportunity that it is! It’s not everyday that we get to strut our stuff in front of nearly 100 Contra Costa County Real Estate Professionals. See old friends, make new ones, and show everybody just why they should work with you, sell your listings, or send you referrals. &

Realty World & Vista Home Loans Weekly Update Meeting Home Prices Just Too High for Many Buyers The current housing slowdown is different from previous cooling markets because it comes at a time when the economy is otherwise doing well, economists say. Buyers are backing off — not because of a poor job market or high interest rates — but because the housing stock is out of their price range. Last year, a median-priced home cost nearly eight times average annual earnings, up from about five times annual earnings in 1980, according to research by investment firm Merrill Lynch. At that rate, there’s an excess supply of 1.5 million homes in a market where 8 million homes are sold in a good year, estimates investment firm Goldman Sachs. But with interest rates still relatively low and credit available, home buyers are starting to dip their toes back into the market, some economist say. And that could help mop up excess supply. Carl Tannenbaum, chief economist at LaSalle Bank in Chicago, hypothesizes that the current downturn may prove to be much quicker than in the past. The Internet and new information services may be helping both buyers and sellers find balance faster than in the past. "There's a reasonable chance that we're closer to the bottom than a lot of people think,” Tannenbaum says. Source: The Christian Science Monitor, Mark Trumbull (02/07/07) &

Foreclosures Hurt Neighborhood Home Values In testimony Wednesday to a U.S. Senate panel, the NATIONAL ASSOCIATION OF REALTORS® said abusive and predatory lending practices are putting our nation’s communities at risk. Abusive lending practices cause families to lose their homes and savings when they’re forced to foreclose. Vacancies that result can deflate the value of surrounding homes, as well, NAR President Pat Vredevoogd Combs told the U.S. Senate Committee on Banking, Housing and Urban Affairs. “High foreclosures of single-family homes are a serious threat to neighborhood stability and community well-being,” Combs said. “NAR supports responsible lending with increased consumer protections to ensure that the ‘dream’ our members help fulfill does not turn into a family’s worst nightmare.” Stronger anti-predatory lending legislation and more consumer education on nontraditional mortgage products are needed to reduce foreclosure rates, she said. To help consumers learn more about risky mortgages, NAR and the Center for Responsible Lending developed a brochure, Specialty Mortgages: What Are the Risks and Advantages? “Real estate professionals have a strong stake in preventing predatory lending,” Combs said. “We have to make sure that while addressing predatory lending, the legislative and regulatory responses to lending abuses do not go too far and inadvertently limit the availability of reasonable credit for prime as well as subprime borrowers.” Realty World & Vista Home Loans Weekly Update Meeting &

Sellers Ponder Vacant-Home Price Cuts As the number of unsold homes mount, so do headaches for home owners. About half of all the single-family homes on the market are sitting empty, says Michael Carliner, vice president of economics for the National Association of Home Builders. Owners with little or no equity in their homes face a tough choice. They can accept a loss or take a risk that eventually a buyer will pay their price. Sellers who wait often are faced with the financial strain of paying two mortgages, which increases the risk of default. Plus, many must deal with the issues associated with a vacant house — everything from mowing the grass to worrying about frozen pipes. The net effect is increasing downward pressure on home prices. "The longer homes for sale remain vacant, the more desperate the sellers become," says Anirban Basu, an economist who is chairman and chief executive of Sage Policy Group Inc. in Baltimore. "The growing number of vacant homes means more sellers out there are ready to be realistic about the market and drop prices." Source: Baltimore Sun, Lorraine Mirabella (02/08/07) Realty World & Vista Home Loans Weekly Update Meeting &

Exurbs Hard Hit by Slowing Market Suburbs farthest from the urban core, also known as exurbs, are experiencing more dramatic drops in home sales and prices than close-in suburbs. Ever since the five-year U.S. housing boom ended in the summer of 2005, home construction in these distant exurbs has slowed and prices and sales have fallen more than those of suburban neighbors. Economists and real estate professionals say builders created too much inventory in far-out areas, expecting that buyers would eventually come. The Northern Virginia Association of REALTORS®, for instance, reports an 11 percent drop in the average home price in Loudoun County last year. On the other hand, the average price in Arlington County — which is closer to Washington, D.C. — registered a more modest decline of 2 percent. The same trend is seen in California and in Florida. Brad Hunter, director of Metrostudy's South Florida division, says construction in the far-flung suburbs came in response to robust price appreciation. But speculative investors — rather than buyers who planned to occupy the dwellings — accounted for a majority of exurban sales in recent years. Source: Reuters, Patrick Rucker (02/06/07) Realty World & Vista Home Loans Weekly Update Meeting &

Californians Stretch Dollars to Buy a Home Even as the California housing market slowed in 2006, more people have taking on riskier mortgages so they can become a home owner. More than 21 percent of buyers in 2006 chose mortgages with no down payment, up from 4.5 in 2000, according to a survey conducted for the California Association of REALTORS®. The median down payment fell 8.8 percent to $73,000 last year from $80,000 in 2005, even as median home prices rose, at least modestly, in many parts of the state. It was the first annual drop in median down payments since 1995. People purchasing their first home were four times more likely to take out a loan with nothing down than repeat buyers, according to the report. About 40 percent of first-time buyers opted for loans without down payments. Even as many first-time buyers showed a willingness to take on higher debt, the overall percentage of first-time buyers fell, reaching its second-lowest level on record. Only 27.1 percent of purchasers last year were buying for the first time, down from 30.5 percent in 2005. "The market is going to have to find a way to add new buyers," says Ed Leamer, director of the UCLA Anderson Forecast. "That's another symptom of a market gone awry." Source: The San Francisco Chronicle, Marni Leff Kottle (02/07/07) Realty World & Vista Home Loans Weekly Update Meeting &

Appraisers Get Pressured to Falsify Findings The pressure is on property appraisers to come up with the “right” number, say 90 percent of appraisers surveyed by October Research Corp., which publishes Valuation Review , an industry newsletter. That percentage is much higher than it was in 2003, the last time the survey was conducted, when only 55 percent of appraisers reported attempts by others to influence their findings. The current survey found that 68 percent of appraisers lost the client when they refused to fudge the numbers and 45 percent reported not being paid. Seventy-one percent of appraisers blamed mortgage brokers for the pressure, while 56 percent said real estate practitioners pressured them. Source: Washington Post Writers Group, Kenneth Harney (02/02/07 ) Realty World & Vista Home Loans Weekly Update Meeting &

Subprime Loan Defaults Hit Decade High Home owners with subprime loans are missing payments more often than at any time in the last 10 years, according to a report by investment bank Friedman Billings Ramsey & Co. The default rate on subprime loans that have been packaged into bonds to be sold to investors rose to 10.09 percent in November, up from 6.62 percent a year earlier. It's the highest default rate in a decade, exceeding the 10.05 percent level reached in November 2001 at the end of the last U.S. economic recession, the report says. Defaults are rising as rates on many adjustable-rate mortgages reset and personal savings decline. The savings rate last year fell to a negative 1 percent, the lowest since 1933, during the Great Depression, Commerce Department data show. "There are no signs of pressure abating (in) the subprime arena, and there are some signs that problems are accelerating," Angelo Mozilo, chief executive of Countrywide Financial Corp., the largest mortgage lender, said during a Jan. 30 conference call. Source: Reuters News (02/02/07) Realty World & Vista Home Loans Weekly Update Meeting &

India: Real Estate Practitioners in Short Supply Mumbai, the largest city in India and probably in the world, is looking for a few good real estate professionals to meet the demand of its unprecedented booming real estate sector. "The real estate companies are facing a severe shortage of manpower in terms of experienced people who understand property business," says KN Vaid, director general of Akruti Institute of Real Estate Management in India. Demand far exceeds supply, Vaid says. Case in point: 18 recently graduated business students in a real estate track received more than 2,000 offers from various companies, Vaid says. Source: The Economic Times, Apurv Gupta (02/07/07) Realty World & Vista Home Loans Weekly Update Meeting &

Expect 2007 to Be 4th Best Year on Record Pending home sales are higher, affirming the stabilization that is occurring in home sales, according to the NATIONAL ASSOCIATION OF REALTORS®. The Pending Home Sales Index, based on contracts signed in December, rose 4.9 percent to an index of 112.4 from an upwardly revised level of 107.2 in November, but is 4.4 percent lower than December 2005. The monthly gain was the biggest increase since March 2004 when the index rose 6.9 percent. A steady narrowing from year-ago readings has been observed since last July when the level of unsold housing inventory peaked at an all-time high. David Lereah, NAR’s chief economist, says a moderate rise in existing-home contracts is a welcome relief. “Some of the monthly gain may be weather related, but it appears buyers are becoming more comfortable, sensing the timing is good and that their local market has bottomed out,” he says. “I expect modest sales gains throughout the year, with what I believe are sustainable levels of activity. 2007 promises to be the fourth-best year on record.” What Happened Regionally The upturn was broad based, with all regions showing an increase. In the Northeast, the index jumped 8.1 percent in December to 89.9 but was 4.8 percent below a year ago. In the West, the index rose 5.3 percent to 112.2 but was 4.9 percent below December 2005. In the South, the index increased 4.3 percent to 129.8 but was 4.2 percent lower than a year earlier. In the Midwest, the index was up 3.2 percent in December to 103.2 but was 4.3 percent below December 2005. What the Index Means The index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed and the transaction has not closed, but the sale usually is finalized within one or two months of signing. An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined and the first of five consecutive record years for existing-home sales. There is a closer relationship between annual changes in the index and actual market performance than with month-to-month comparisons. Realty World & Vista Home Loans Weekly Update Meeting &

Steady Climb Seen for Existing-Home Sales Consumers are beginning to respond to more favorable housing market conditions, with existing home sales expected to steadily increase into 2008, according to the latest forecast by the NATIONAL ASSOCIATION OF REALTORS®. “After reaching what appears to be the bottom in the fourth quarter of 2006, we expect existing-home sales to gradually rise all this year and well into 2008,” says David Lereah, NAR’s chief economist. Existing-home sales, which reached the third-highest total on record of 6.48 million in 2006, are forecast at 6.44 million in 2007 and 6.64 million in 2008. New construction, on the other hand, will take longer to recover. Following a fourth-best 1.06 million in 2006, new-home sales projected to decline to 961,000 this year and then rise to 971,000 in 2008. “We look for that sector to turn around later in the year,” Lereah adds. Among the other key highlights of NAR’s new forecast: Housing starts are likely to total 1.52 million in 2007, down from 1.80 million units in 2006, and then increase to 1.56 million next year. “When new home demand begins to catch up with supply, builders will slowly increase construction — probably in the second half of this year,” Lereah says. The 30-year fixed-rate mortgage is forecast to rise to 6.7 percent by the second half of the year. Freddie Mac reported the 30-year fixed rate at 6.14 percent in December, but it has been trending up since. “Mortgage interest rates remain favorable, and a gradual rise means potential buyers have some time to weigh purchase decisions,” Lereah says. “When existing-home supplies become more balanced between buyers and sellers this spring, we’ll see some modest price gains.” The national median existing-home price should grow 1.9 percent to $226,200 in 2007, after rising only 1.1 percent in 2006. The median new-home price is expected to increase 1.8 percent to $249,800 in 2007, following a similar gain last year. Stronger gains are forecast for 2008, with existing-home prices rising 3.2 percent and new-home prices increasing 3.4 percent. The unemployment rate is seen to average 4.7 percent in 2007, compared with 4.6 percent last year. Inflation, as measured by the Consumer Price Index, is projected at 2.0 percent this year, down from 3.2 percent in 2006, while growth in the U.S. gross domestic product is likely to be 2.8 percent in 2007, down from 3.4 percent last year. Inflation-adjusted disposable personal income will probably rise 3.7 percent in 2007, up from a gain of 2.7 percent in 2006. Realty World & Vista Home Loans Weekly Update Meeting &

Controversial Real Estate Start-up Expands Redfin, the online real estate sales start-up based in Seattle, is expanding its service to Los Angeles, Orange County, and San Diego, Calif. That will increase the number of properties listed on the Web site by 300 percent. Redfin stirred controversy when it first announced its business model because it refunds two-thirds of the commission due to the buyer’s representative to the buyer. The start-up has raised $9 million from Madrona Venture Group, Vulcan Ventures, and others, and plans to expand into Boston, Chicago, and Washington D.C. later this year. Source: Seattle Post-Intelligencer (02/09/07) Realty World & Vista Home Loans Weekly Update Meeting &

Wrap up… I’ll be out of town from Feb. 22 nd through the 26 th . Tina and Real Estate Training Start Again Next Month! Loan Officer Training Going Well… Needs and Wants? Questions and Answers? &